Ministers should consider scaling up a £200 million programme which transfers UK aid money directly to poor families and individuals in the developing world, a watchdog has recommended.

The Department for International Development (DFID) is thought to be the world’s largest bilateral funder of “cash transfer” schemes, said the Independent Commission for Aid Impact (ICAI) in a review of the programme.

The schemes provide regular monthly payments of small sums to households to pay for basic needs like food and education.

The department has a target of reaching six million people a year through the schemes, including programmes targeting pregnant women and new mothers in Nigeria, elderly people in Uganda and parents in Pakistan who receive payments if their children attend school.

Payments range from as little as £6 a month for participating households in Uganda to £19 for a family of five in Zimbabwe.

ICAI warned that DFID had missed some targets for improving school attendance and said that work on health, nutrition and women’s empowerment could be improved.

And it said there was evidence of a lack of a strategic approach to providing recipient governments with technical assistance.

But the review found that cash transfers had “helped to make vulnerable people more resilient to shocks such as ill-health, or bad weather hitting their farms, by encouraging them to save and giving them access to credit”.

It said DFID “should consider scaling up its financial contributions in the short to medium-term” where there was evidence of support from national governments.

ICAI chief commissioner Alison Evans said: “DFID’s use of cash transfers have helped to tackle poverty and vulnerability for some of the poorest people in the world.

“The department has reached millions of people, providing strong value for money, and helping deliver on the commitment to ‘leave no-one behind’.

“But there is no room for complacency.

“Going forward DFID needs to do more to improve on school attendance, health and nutrition and women’s empowerment, where the global evidence shows that cash transfers can make even more of a difference.”

A DFID spokesman said: “Cash transfers get aid to those who need it, when they need it, and achieve value for taxpayers’ money – and this independent report recognises that.

“Small cash transfers can be the difference between food and no food for families who are living on less than two dollars a day. They empower people to make decisions about what they need, cut out the middle man, and reduce waste.”

Following recent criticism of cash transfers to Pakistan by Tory MP Nigel Evans, who told the Daily Mail it looked like the UK was “exporting dole”, Commons International Development Committee chairman Stephen Twigg said: “ICAI’s review shows the value of DFID’s cash transfer programmes and adds to a wealth of evidence which shows that, contrary to recent coverage, cash transfers are an effective means of development.

“DFID should carefully consider its options for scaling up and improving its work in this area, based on the evidence which ICAI has found, to ensure that it is achieving maximum value for money. We will challenge them on how they will do this in the coming months.”